Parmatown serves as poster child for commercial mortgage risk

Some investors are steering clear of mortgage-backed securities tied to retail real estate, The Wall Street Journalreports, in a story that includes as one of its case studies the sale last fall of Parmatown Mall.The paper says that “commercial mortgage bonds, including these shaky malls, have lagged behind a recent rally and retail loans in new deals are getting greater scrutiny from investors and rating firms.”Overall, default rates on mortgage securities backed by shopping malls, shopping centers and other retail properties “are lower than on most other commercial-real-estate categories — 7.7% of the $172.5 billion in retail loans outstanding in bonds are delinquent,” according to The Journal. “But when individual retail properties get into trouble, their values plummet faster than other property types, which can result in greater losses for investors.”The newspaper notes that one example of mortgage investors' pain came with the sale last November of Parmatown. “Holders of the mall's $61.6 million securitized mortgage received proceeds of $5.9 million from the sale, 90% less than they were owed,” The Journal reports.The paper says Parmatown, opened in 1962, had struggled since SouthPark Mall opened 10 miles away in Strongsville in the 1990s. Parmatown's previous owners, founders of Forest City Enterprises Inc. operating as RMS Investment Corp., had redeveloped the mall and added a Walmart in an anchor location long abandoned by Dillard's.“Based on an appraisal in 2004, just before the commercial-mortgage-bond market began its explosive growth, Parmatown was valued at $111.50 a square foot,” The Journal reports. “That was reduced to $17 a square foot at last year's sale to Cincinnati-based mall owner Phillips Edison & Co.”

Follow the money

A good investigative piece on PublicIntegrity.org finds that the Supreme Court's Citizens United decision “unleashed nearly $1 billion in new political spending in the 2012 election, with media outlets and a small number of political consulting firms raking in the bulk of the proceeds.”Federal Election Commission data show that throughout the 2012 election, “corporations, unions and individuals that could take advantage of the high court's ruling were responsible for about $933 million of the estimated $6 billion spent during the contest,” according to the story. Nearly two-thirds of the new money — about $611 million — went to 10 political consulting firms, according to a Center for Public Integrity analysis.All but one of the top 10 recipients “bought advertising in various media markets on behalf of super PACs and nonprofits,” the story notes. “Eighty-nine percent of the expenditures made to the top 10 went to spots attacking candidates, the data show.”

The story then details the murky world of campaign finance.One of the top 10 recipients was American Media & Advocacy Group, a favorite of conservative groups, which ranked No. 5 at $27 million.In Ohio, the story notes, American Media & Advocacy Group was paid by the conservative Congressional Leadership Fund “to purchase ads slamming Democrat Betty Sutton in the House race for District 16.” American Media was also working for the Rep. Sutton's Republican opponent, Rep. Jim Renacci.“The same person was listed in records as buying media in the Cleveland market — at the same TV station in at least one case — for both the Renacci campaign and the Congressional Leadership Fund,” according to the story.

This and that

A matter of antitrust: Bloomberg reports that Cleveland law firm Squire Sanders is beefing up its antitrust practice with the addition of Mark Botti, antitrust head of Washington, D.C.-based Akin Gump Strauss Hauer & Feld LLP, and two colleagues, J. Brady Dugan and Anthony Swisher.Mr. Botti, head of Akin Gump's antitrust and unfair competition practice, previously spent 13 years at the U.S. Justice Department, Bloomberg notes. There, he was the assistant chief of the Antitrust Division and oversaw hearings by the Federal Trade Commission on health care during 2004 and 2005.“The expansion of our antitrust practice has been one of the key strategic goals of our Washington, D.C., office and our regulatory practice,” said Jim Maiwurm, chairman and global CEO of Squire Sanders, in a statement. “As antitrust scrutiny and enforcement continue to rise around the world, the addition of this team to the firm's existing global antitrust and regulatory capabilities will enhance our ability to support clients in this strategically critical area.”Mr. Botti represents clients on antitrust matters that include government investigations, mergers and acquisitions, and joint ventures.Drinking problem: Need more evidence you should stay away from consumer energy drinks? Check out this Associated Press story, which includes a comment from a suburban Cleveland doctor.“From 2007 to 2011, the government estimates the number of emergency room visits involving the neon-labeled (energy) beverages shot up from about 10,000 to more than 20,000,” the AP reports. “Most of those cases involved teens or young adults, according to a survey of the nation's hospitals released late last week by the Substance Abuse and Mental Health Services Administration.”

More than half of the patients considered in the survey who wound up in the emergency room told doctors they had downed only energy drinks,” according to the AP. In 2011, about 42% of the cases involved energy drinks in combination with alcohol or drugs, such as the stimulants Adderall or Ritalin."A lot of people don't realize the strength of these things. I had someone come in recently who had drunk three energy drinks in an hour, which is the equivalent of 15 cups of coffee," Dr. Howard Mell, an emergency physician in the Cleveland area who serves as a spokesman for the American College of Emergency Physicians, tells the AP."Essentially he gave himself a stress test and thankfully he passed,” he says. “But if he had a weak heart or suffered from coronary disease and didn't know it, this could have precipitated very bad things."Music to his ears: Real estate developer Bruce C. Ratner of Forest City is spreading his wings.Mr. Ratner, who leads Forest City Ratner Cos. in New York City, built the Barclays Center in Brooklyn that already has hosted concerts by Bob Dylan, Barbara Streisand and the Rolling Stones, among others. But, as The New York Times notes, “when the genre chosen was Jewish music, (Mr.) Ratner decided to take charge himself.”The developer, whom the paper says “cut his musical teeth on cantorial singing at a synagogue in his hometown, Cleveland,” is the de facto impresario of a concert at the Barclays Center announced this week that will feature the violinist Itzhak Perlman and Yitzchak Meir Helfgot, the cantor from the Park East Synagogue in Manhattan who has been a leader in the revival of Jewish liturgical music.“The two musicians will perform at the 19,000-seat arena on Feb. 28 in an event where food carts will feature glatt kosher food and a special section will most likely be set up with separate seating for men and women, to accommodate the customs of ultra-Orthodox Jews, who make up a sizable share of the Jewish population of Brooklyn,” according to The Times.Mr. Ratner tells that newspaper that Brooklyn has a storied tradition of “chazzanut” — the cantorial singing largely centered around synagogue prayers. The Times says Yossele Rosenblatt, known as the Jewish Caruso, led prayers at First Congregation Anshe Sfard in Borough Park in the 1920s and 1930s and the legendary Moshe Koussevitzky was the cantor at Temple Beth El in Borough Park in the 1950s and 1960s.You also can follow me on Twitter for more news about business and Northeast Ohio.

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